Why is Your Car Insurance Getting More Expensive?

If you’re like most people, you don’t have an endless pile of cash sitting around. So, you probably keep very close tabs on the bills that arrive in your mailbox every month. Unfortunately, California is home to some of the most expensive car insurance premiums in the country, so the last thing you want is for them to climb even higher!

But simply crossing your fingers and hoping your premiums don’t go up doesn’t work in the real world. What you need to do instead is figure out the reason for the increase — and, more importantly, see if there’s anything you can do to get rid of it.

Here are some of the most common reasons why your car insurance premiums just went up:

Your address changed

If you’ve moved recently, you may have seen a big change in your car insurance rates. That’s because car insurance companies look at your address when determining your monthly premiums. If you moved to a neighborhood that’s prone to car thefts, or if your new area has a lot more dense traffic (and, thus, a higher risk of getting into an accident) than your old area did, you’ll see your rates go up.

Your recent accident or speeding ticket

Here in California, Proposition 103 requires car insurance companies to offer a 20% discount to good drivers. According to the state, you’re a “good driver” if you’ve had a driver’s license for at least three years, you haven’t had more than one point put on your driving record in the past three years, you haven’t been to traffic school more than once over the past three years, and you haven’t been at-fault in a crash where someone was injured or killed in the past three years.

Since Proposition 103 was signed into law way back in 1988, you may not have even known it existed — or that it was saving you so much money! But if you recently did something that violated your “good driver” status, be prepared to see your car insurance rates go way up.

In the case of at-fault accidents, even if you’ve never filed an insurance claim before, you can still count on your monthly premiums going up. In fact, a recent study by the National Association of Insurance Commissioners found that the average California driver who files a claim worth $2,000 or more for an accident they caused will see their premiums increase by 62%!

Luckily, though, Proposition 103 also made it illegal for California car insurance companies to use your credit score as a factor in determining your rates. So, if you’re dealing with big credit card bills, student loan payments, or anything else that has lowered your credit score, you can at least rest easy knowing it won’t make your car insurance premiums go up! (California is actually the only state in the country that has a law like this in place, so let’s hear it for the Golden State!)

You married someone who’s a worse driver than you are

If you and your new husband have decided to share a car insurance policy — and he’s got a bunch of tickets or accidents under his belt — you’ll see your premiums go up, even if you’re the safest driver in the world!

Your kids just started driving

Insurance companies consider teenage drivers to be some of the riskiest out on the roads. Even if your kids are good drivers, they’re in an age group that statistically is very dangerous. So, adding your kids onto your policy will make your monthly premiums go up.

(However, your kids can actually save you a little bit of money every month if they do well in school. We’ll explain how a little bit later when we talk about discounts.)

You bought a new car

California’s car insurance companies don’t just assess the way you drive; they also assess the car you’re driving! Obviously, a new car is going to be worth more — meaning your insurance company will have to pay you more money if it’s stolen or totaled. And even if the damage isn’t all that severe, it will still cost more to repair a new car than an older one. Since your insurance company now faces a risk of paying out more money, they’re going to charge you higher premiums in return.

The type of car you bought may have also played a role in your newer, higher insurance premiums. For example, if you just traded in your minivan for a convertible, you’re going to wind up paying higher rates. Or, if you bought a car that has a higher tendency to be stolen — like a Honda or a Toyota — you’ll see your premiums go up.

However, buying a new car can help save you some money on your car insurance premiums, too! If your new car has features that your old car didn’t — like side airbags, anti-lock brakes, or an anti-theft system or a vehicle recovery system (like LoJack or OnStar) — you’ll actually get a discount.

You lost a discount

We’ve already talked about discounts for new features, but those aren’t the only ways to save money on your car insurance premiums. One big discount that California car insurance companies hand out is a multi-car discount — meaning that you’ve got two or more cars in your household insured with the same company. Because of your loyalty, a multi-car discount can save you big bucks every month.

Another popular discount here in California applies to people who have their car and their home insured through the same company. Once again, you’re being rewarded for your loyalty, so you’ll pay smaller premiums on both policies every month. But if you just got a new homeowner’s insurance policy through a different company, you’ll see an increase in your car insurance rates.

Luckily, car insurance premiums aren’t set in stone. So, the rate you’re faced with on your current policy may not be what another insurance company wants to charge you. If you think your car insurance has gotten a little TOO expensive, do some comparison shopping. It’s not hard to switch companies (especially if you have a good insurance agent to help you), and the savings can be dramatic!Even your kids’ grades could play a role in your premiums going up! If you’ve got teenagers or college students on your policy — and they’re no longer getting the grades that qualify them for a good student discount — you’ll see your premiums go up. Or, if you forgot to send in the necessary documentation — like a copy of their report card or a copy of their Dean’s List certificate — your insurance company may have removed the discount.

Raphael Locsin is the principal agent at Shift Insurance. His goal is to help individuals and companies alike protect their assets and manage liabilities. He created this blog as a way to compile industry knowledge, resources, and general information for the purpose of consumer education.

Comments

My liability car insurance just went up from 270 a year to 367 for no reason. I got in no accidents and havent had a ticket in over 10 years. I havent moved and live at the same address. I checked other companies and they couldnt beat AAA price. I am very upset for almost a 100 buck increase for no reason.

Dennis, unfortunately in the past few years AAA has increased their rates in California and they are not the only company to do so. Insurance premiums are calculated and recalculated frequently so you may be experiencing a standard rate increase. If you need help shopping around, we compare rates for all the top carriers in California and may be able to help find you something cheaper.